NZDUSD trades 0.29% higher at 0.6621 close to a five-month high. New Zealand’s Gross Domestic Product rose by 0.7% in the third quarter, beating most analysts expectations. Also the Consumer confidence has jumped, reversing a decline over the last year and putting faith back at “average” levels. The current account deficit increased from $10.2 billion in the 2Q to $10.3bn in the 3Q, but in ratio terms, it was steady at 3.3% of GDP.
Kiwi started a rally after the Reserve Bank of New Zealand kept benchmark rates unchanged in it’s latest policy meeting. Economists now expect that Reserve Bank of New Zealand will cut the interest rates in the first quarter of 2020. If global growth continues to be under pressure, Reserve Bank of New Zealand might proceed with an additional rate cut to 0.5% during 2020.
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NZDUSD is Overbought
NZDUSD technical outlook is positive as the pair trading close to five-month highs and above the major daily moving averages. The pair has reached an overbought level as the RSI 14 index indicates with a reading up to 71.43.
Kiwi traders are looking for higher levels now, the first resistance stands at 0.6623 the daily high. Above that level more offers await at 0.6634 the high from December 13 high. A break above will pave the way for the next resistance at 0.6786 the high from July 21st.
On the other hand, immediate support will be met at 0.6596 the daily low. The next support area stands at 0.6527 the 200-day moving average. A move below the 50-day moving average at 0.6443 might cancel the bullish momentum and bears will be in the drivers’ seat.
We might see a ranging market in the Christmas and New Years weeks as the volumes will be thin. However, investors are advised to stay cautious as the thin volumes might create big moves either way.
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